Time for rate cuts is running out, Jim Bianco warns ahead of Fed meeting

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By journalsofus.com


“I agree that the Fed doesn’t make policy changes in the summer of an election year,” the president of Bianco Research told CNBC’s “Fast Money” on Monday. “If they don’t pull the trigger by June, it’s November [or] In December at the earliest – only if the data confirms it. And, right now, the data doesn’t warrant that.”

According to Bianco, for Fed Chairman Jerome Powell to cut rates this spring, the economy would have to weaken dramatically.

“The economy is very strong right now,” he said. “It’s in the ‘no landing phase’ as we like to call it. This is not a Boeing plane. No part of it is falling, and it’s probably 2.5%. It is growing at a pace of 3%.

This week’s Fed meeting comes nearly two years after policymakers began a rate hike campaign.

“It looks like we’re getting inflation down to about 3%,” he said. “That’s not 2[%]And the Fed has made it clear that they need confidence to move to 2[%], And, we’re not getting that.”

It appears Wall Street may be on notice. The CME FedWatch tool showed on Monday that expectations for a quarterly rate cut fell below 50% in June.

Plus, Treasury yields are moving higher. The benchmark 10-year Treasury note yield is yielding 4.328% – its highest level in a month and approaching a four-month high.

“They can go even higher than that,” Bianco said. “This is going to be the reality of inflation.”

In January, Bianco told “Fast Money” that the 10-year yield would reach 5.5% this year. This is a level not seen since May 2001.

He still believes the yield trend will remain high in the background.

“I don’t think that’s the consensus in the market,” Bianco said. “When we were at 5% in October, we were throwing 3% growth into the economy, and it was able to handle that level of interest rates just fine.”

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